The Cost of Starting a Digital Network
In previous posts I’ve looked at creating a digital network out of own-resources – bootstrapping — as a way of avoiding the venture capital squeeze — bear-hugging. Now it’s time for some specifics.
Lately, we’ve been looking back over the past 16 months of Syntagma Media’s existence and attempting to work out the full cost of the operation in monetary terms. Remember, it’s been done without VC finance, bank or Angel loans or equity sales of any kind. The only aid has been a credit card, which is cleared at the end of every month. Clearly someone must have borne the full cost.
We calculated all the costs of setup, fees for advice, authoring, design, general tech, plus all the usual business stuff. I also added in my own cost and resources at my standard consultancy rate. The sweep mainly included Syntagma Digital, but also the much smaller liabilities of Dial Publishing — our incubating print arm.
The total cost to my personal exchequer came to $250,000.
I must confess I was a little taken aback by that number. I hadn’t realized I had that amount of loose change floating about. But accountancy doesn’t lie.
Of course, there has been a good deal of income, especially in the past 6 — 9 months. All of that has also gone back into the business. So the bottom line sits on the question : is Syntagma Digital worth more than a quarter of a million bucks?
I’ll let you into a secret, I was offered more than that around four months ago, but the deal involved running someone else’s British business.
Setting up a digital content business then doesn’t come cheap. The fact is, we could have spent considerably more as, for example, our near contemporary b5media has. It’s very much a matter of priorities and some fine calculation of whether a particular expenditure will be cost-effective or not. In my experience (16 months worth) most expenditures are not.
Refining the art of spending is therefore top of the agenda when it comes to bloodsucking your business — I use that term instead of bootstrapping here because it helps to know that it’s your blood the business is sucking. That knowledge alone concentrates the mind wonderfully.
Finale : Sixteen months in, $250,000 down, working like a sugar-cane cutter, no end in sight. Is it all worth it? Wait for the book*. All the killer facts are there.
* The Syntagma Story by John M Evans to be published by Dial Publishing later this year.
Assigning a starting cost of 250K/year seems pretty reasonable to me. Some will do it cheaper, some will do it more expensively (our first year was about 300K, from memory).
Acknowledging that there are very real costs, though, is never a bad thing. And being a bootstrapper (I always have been, always will be), I honestly believe there are few better qualities than the ability to measure real cost vs real benefit.
By Jeremy Wright on February 17th, 2007 at 9:11 pm
For us, that figure applies to the first 15 months, in other words, the to-date cost of the operation, and anticipates the costs of incorporation, coming very soon.
That’s all very true, Jeremy. Costs are the key factor, plus what they deliver. A lot of people have jumped into this space without considering the costs. Failing to get VC funding, they’ve had to collapse the business, losing what they put into it.
I believe even if you’re aiming for funding, you should shape up for missing out, so you won’t lose your shirt in the process. Self-reliance is good a shield for the back.
By John Evans on February 18th, 2007 at 10:41 am